Question

Question 1 Mr Kleenex and Ms Sorbent own and operate a tissue retail business. The partnership agreement indicates that Mr Kleenex is entitled to 60% of the profits and Ms Sorbent 40% The accounting net profit for the year was $525,000. Selected items included in the Profit and Loss Account were:

Income

Franked dividends of $51,000 from public companies with franking credits of $21,000 attached.

Unfranked dividends of $3,000 from public companies without franking credits attached.

Interest on drawings

- Mr Kleenex 1,250

- Ms Sorbent 750

Expenses

Interest paid to Mr Kleenex for monies borrowed to purchase the above shares. 40,000

Salaries taken by Mr Kleenex and Ms Sorbent in their profit sharing proportions. 90,000

Interest paid on capital

- Mr Kleenex 2,250

- Ms Sorbent 1,350

Superannuation paid for partners

- Mr Kleenex 22,750

- Ms Sorbent 13,850

Additional Information Mr Kleenex taught personal hygiene classes to seniors each Wednesday and he received $5,000 for the financial year.

Required:

Calculate the net income of the partnership, the taxable income and snet tax payable of each partner in the current year. You are not required to calculate the small business tax offset.

Answer 1

calculation of the net income of the partnership of mr.kleenex and mr.sorbent

net profit for the year $525000

franked divident $51000

franking credits (it wil be excluded from taxable amt) $21000

unfranked divident $3000

interst on drawings

mr.kleenex $1250

mr.sorbent $1350

(-) interest paid to

mr.kleenex $40000

(-)salary paid to  mr.kleenex    $54000

mr.sorbent $36000

(-)interest   

   mr.kleenex $2250

mr.sorbent $1350

(-)super annution

mr.kleenex $22750

mr.sorbent $13850

(-)hygen classs $5000

net income of the patnership $427400